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Regime Change in Iran? The Real Motivations Behind Sanctions

Sanctions against Iran's central bank are meant to cripple the country's oil industry.

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“Isolated” Iran has $4 billion in joint projects with Venezuela including, crucially, a bank (as with Ecuador, it has dozens of planned projects from building power plants to, once again, banking). That has led the Israel-first crowd in Washington to vociferously demand that sanctions be slapped on Venezuela.  Only problem: how would the U.S. pay for its crucial Venezuelan oil imports then?

Much was made in the U.S. press of the fact that Ahmadinejad did not visit Brazil on this jaunt through Latin America, but diplomatically Tehran and Brasilia remain in sync. When it comes to the nuclear dossier in particular, Brazil’s history leaves its leaders sympathetic.  After all, that country developed -- and then dropped -- a nuclear weapons program. In May 2010, Brazil and Turkey brokered a uranium-swap agreement for Iran that might have cleared the decks on the U.S.-Iranian nuclear imbroglio.  It was, however,  immediately sabotaged by Washington. A key member of the BRICS, the club of top emerging economies, Brasilia is completely opposed to the U.S. sanctions/embargo strategy.

So Iran may be “isolated” from the United States and Western Europe, but from the BRICS to NAM (the 120 member countries of the Non-Aligned Movement), it has the majority of the global South on its side.  And then, of course, there are those staunch Washington allies, Japan and South Korea, now pleading for exemptions from the coming boycott/embargo of Iran’s Central Bank.

No wonder, because these unilateral U.S. sanctions are also aimed at Asia.  After all, China, India, Japan, and South Korea, together, buy no less than 62% of Iran’s oil exports.

With trademark Asian politesse, Japan’s Finance Minister Jun Azumi let Treasury Secretary Timothy Geithner know just what a problem Washington is creating for Tokyo, which  relies on Iran for 10% of its oil needs.  It is  pledgingto at least modestly “reduce” that share “as soon as possible” in order to get a Washington exemption from those sanctions, but don’t hold your breath. South Korea has already announced that it will buy 10% of its oil needs from Iran in 2012.

Silk Road Redux

Most important of all, “isolated” Iran happens to be a supreme matter of national security for China, which has  already rejected the latest Washington sanctions  without a blink. Westerners seem to forget that the Middle Kingdom and Persia have been doing business for almost two millennia. (Does “Silk Road” ring a bell?)

The Chinese have already clinched a  juicy deal for the development of Iran’s largest oil field, Yadavaran. There’s also the matter of the delivery of Caspian Sea oil from Iran through a pipeline stretching from Kazakhstan to Western China. In fact, Iran already supplies no less than 15% of China’s oil and natural gas. It is now  more crucial to China, energy-wise, than the House of Saud is to the U.S., which imports 11% of its oil from Saudi Arabia.

In fact, China may be the  true winner from Washington’s new sanctions, because it is likely to get its oil and gas at a lower price as the Iranians grow ever more dependent on the China market.  At this moment, in fact, the two countries are in the middle of a  complex negotiation on the pricing of Iranian oil, and the Chinese have actually been ratcheting up the pressure by slightly cutting back on energy purchases.  But all this should be concluded by March, at least two months before the latest round of U.S. sanctions go into effect, according to experts in Beijing. In the end, the Chinese will certainly buy much more Iranian gas than oil, but Iran will still remain its  third biggest oil supplier, right after Saudi Arabia and Angola.

 
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